As a business owner, it’s likely that the time will come when you choose to shut your business down. It’s a difficult time and it can be a difficult process. However, with the right information, you can do it right – wrapping things up, breaking from the past and setting yourself for a new future.

In this article, we’re going to outline the general steps for closing a business. We’ll also talk about some of the main things you should keep in mind throughout.

Firstly, closing down is not a sign that you ran a “bad business”. Businesses wind up for all manner of reasons. Most businesses reach a conclusion eventually – few continue operating generation after generation. Yet, even though shutting up shop is common, there’s little good advice around on how to do it right.

It can be quite confusing to know what to do once you’ve made the decision – many of the necessary steps must be made in a specific order. If you’ve decided to wrap it all up, this article will help you plan what you need to do.

What does it mean to “shut down” a business anyway?

Before we look at the steps, it’s worth clarifying what we mean when we refer to shutting down a business. The first thing to know is there is a big difference between making a voluntary choice to close your own business versus being forced into that decision.

This article focuses on the scenario whereby you have the ability to pay out any remaining business debts or supplier bills. For the alternative scenario – when you cannot clear such debts and might be forced into liquidation, you need to speak with a liquidator. With that caveat out of the way, let’s get into it…

The 8-step process for shutting down your business

There are several key things that need to occur in order to completely take care of your responsibilities as an ex-business owner. To have peace of mind that nothing will crop up unexpectedly, these 8 things must be done properly:

  1. Pay out all debts or suppliers. For example, if there are bank loans or rental leases in the name of the business, these must be addressed. A common one can be a car loan. If you have a car loan in the name of a company or trust, you will need to pay off the loan (perhaps by selling the car) or refinance it to your personal name. (Note: refinancing at this point might be easier if you have already accepted employment elsewhere).
  2. Terminate your employees and pay out any unused leave balances and superannuation.
  3. Dispose of all business assets. Keep in mind, though, that some or all of these can be transferred to yourself. For example, you might choose to keep a vehicle that had been operating as a business vehicle. There may, however, be tax implications when doing so.
  4. Terminate insurances, memberships, subscriptions and industry registrations.
  5. Shut down the business bank accounts.
  6. Ensure your final ATO lodgements have been made. These lodgements may include business activity statements, employee end-of-year payroll reporting and the tax return for the final year in which the business had operations.
  7. Cancel your ATO registrations. Depending upon your specific business structure, this could include ABN, TFN, GST and/or PAYG withholding registrations.
  8. Go to your accounting software (e.g. Xero), save any information that could be helpful in the future and then close your accounts.

If you have a company, there is an additional step

To close a company officially, you must deregister it with ASIC. Doing this means that you will no longer incur the annual ASIC company fee.

If you have a trust, there is another additional step

For those that have a trust within their business structure, it might be wise to leave this in existence. A trust can be structured so that it is dormant, without any ongoing annual cost, ready to be used again if the need arises. If you still want to terminate the trust, this will be done via a deed.

Need a hand in shutting down your business? We can help

When the time arrives to put up the “Closed” sign, it can be a bittersweet moment in the life of a business owner. Should that time come for you, rest assured that we can help. We have a wealth of experience in helping business owners through the process of switching the lights off for the last time.

Some of them are retiring. Some are moving on to bigger projects. Some have been hired as employees elsewhere. Some are forced out by a vanishing market. And some, they have just lost their entrepreneurial enthusiasm. All are valid reasons.

So, for whatever reason the shutdown happens, there is a proper way to get the affairs of the business in order. When you could do with a plan and a hand at this demanding time, we’re here. Reach out and we can help to guide you through.